Have European Investors Missed the Exosome ‘Gold Rush’?

Europe US investors exosomes

When Oxford-based Evox Therapeutics announced its €81.1M (£69.2M) Series C round in February, it signaled that investors are taking exosome therapies seriously. But a lack of European investors in the exosome field raises the very real possibility that the best opportunities have already passed, along with the chance to build an exosome ecosystem to rival that of the US. 

Research over the past few decades has moved the understanding of exosomes and other extracellular vesicles from cellular ‘trash bags’ to regulators of cell behavior. This has led to the development of treatments based on this technology.

Biotech companies around the world are receiving big investment bets to develop exosomes as a delivery vehicle and modality unto itself. Codiak Biosciences, an exosome biotech in the US, raised €70.3M ($82.5M) in an IPO last year, followed by a €56.5M ($66.4M) share offering in February. In the time since the Australian firm Exopharm dosed its first phase I patient with an exosome-based wound healing treatment in January last year, its stock price has tripled. And in September, the US firm Aegle Therapeutics raised a €5.5M ($6.5M) Series A to support a clinical trial for its stem cell-derived exosomes.

But no trials have been launched by exosome companies based in Europe. Outside of Evox, European companies in this field have struggled to raise venture funding for clinical trials, and none announced significant venture-backed rounds in 2020.

Go crack this problem

The story is different in the US.

At least three US exosome developers had Series A rounds last year, namely Aegle Therapeutics, Mantra Bio, and Vesigen Therapeutics. They raised a combined €51M ($60M) from syndicates led almost entirely by US venture firms. The one European investor in these rounds was Leaps, the venture arm of Bayer, which co-led Vesigen Therapeutics’ round with Morningside Ventures. 

All of the field is moving faster in the US than Europe,” says Joana Simões Correia, the co-founder, Executive Director, and CSO at Exogenus Therapeutics. The Portuguese company, which has raised about €1M in seed funding so far, is one of a handful of exosome biotechs in Europe.

Simões Correia says the company is aiming to raise a Series A by the end of this year to support the move of its lead candidate into clinical trials – a precarious stage for any small biotech, especially one that lacks easy access to US capital.

Antonin de Fougerolles, the CEO of Evox Therapeutics, says that European investors are historically more cautious. “US investors are more willing to place a big bet on transformative technologies and say, ‘alright guys, go crack this problem,’” he notes. Modified exosome platforms are capital intensive because they add more complexity to drug development and manufacturing.

Things are starting to change, says de Fougerolles, as several European firms are embracing US-like risk levels in the biotech sector as a whole. And in some niches – such as mRNA vaccines – European biotechs are at the forefront as a result.

European interest in Evox has been keen for both its Series B and C rounds, de Fougerolles adds, but the syndicates wound up mostly with US-based VCs. One new investor, Invus, is headquartered in the US but has offices in Europe and Hong Kong as well.

This emphasis on investors in the US was by design, though. “Longer term, that’s the market that we’re most focused on,” de Fougerolles says. Oxford Science Innovation, the Oxford University investment arm that helped launch Evox, returned for the Series C round.

exosome evox therapeutics drug delivery

US-based Codiak Biosciences had a different experience, says CEO Douglas Williams. Codiak has reached out to European investors since its earliest days, as part of a long-term investment strategy. Still, no European firms joined in its venture rounds, and even as a public company, its investor base is largely from the US, says Williams.

Williams is optimistic that, as the company presents clinical data, more European investors will come on board. “As a general rule, they have wanted to see the company advance a little further.”

High risk, high reward

One of the bright sides to exosome technology is the breadth of opportunities. Exosomes often have a natural affinity for specific cells and therapeutic effects on their own. Engineered exosomes can improve this natural targeting and add a variety of therapeutic payloads. For example, exosomes are being explored as delivery vehicles for gene therapies and RNA drugs, which are generating ballooning investments

We like to say there are platforms within the platform,” says Williams. “We’re certainly not going to be able to unlock all of that ourselves.

One anonymous life science investor based in France says his firm typically invests in clinical-stage companies, which at the moment limits options, but that he sees potential in exosomes as a modality. Exosome companies need to demonstrate how their products can be characterized, scaled, and manufactured in a repeatable fashion. 

When we spoke to key opinion leaders and scientists in the space, some still argued that there’s a lot of work still to be done,” he says. They also have questions about how exosomes are formed and how they function.

European investors waiting out the risk on the sidelines might be missing out on the growth of exosome technology, says Simões Correia. “It is frustrating that they’re losing opportunities because of their low-risk position.

Not everyone is convinced the clock is running out for European investors – they are often a few years behind the US, says Lucio Iannone, Senior Director of Venture Investment at Leaps, and a Vesigen board member.

I don’t think they missed the boat. But I would like to see, in the next few years, some investment in Europe. Now that it’s a hot topic, maybe Europe will be keener on taking risks there.

Cover image from Elena Resko. Body text image from Shutterstock.

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